Understand how a parent company may lose control over its subsidiary and the necessary accounting steps to take when this occurs. Learn how to treat components of OCI and reclassify amounts in equity to profit or loss. Explore an illustrative example of how to account for the full disposal of a subsidiary.
Consolidated-financial-statements
Mastering the art of consolidated financial statements
- Non-controlling interest (NCI) in a subsidiary is any equity interest not held by the parent. NCI is presented within equity, separate from the parent's equity, in consolidated financial statements. Measurement of NCI depends on the instrument's classification as equity or liability.
- How to manage business combination under common control with two acceptable approaches for accounting for it: the acquisition method and the pooling of interests method. Each method is explained with an example and some criteria for judging the substance of a business combination under common control.
- How business combinations are accounted for when a parent already has an interest in an investee before it becomes a subsidiary. It also describes how goodwill is calculated and provides an illustrative example of how adjustments are made during the measurement period.
- How to account for business combinations between unrelated parties using the acquisition method under IFRS 3 / ASC 805. Also how to determine whether a subsidiary constitutes a business and what items to include in the consolidated financial statements.
- Subsidiaries may use local GAAP, but must adjust to IFRS/US GAAP for consolidated financial statements. IFRS/US GAAP require uniform accounting policies, adjustments to subsidiary statements to ensure conformity. This may result in deferred tax recognition due to temporary differences.
- Learn about the requirements for preparing consolidated financial statements under IFRS 10 & ASC 810.
- Difference between various types of investments: subsidiaries, joint arrangements, and associates. Learn how they are accounted for under IFRS and US GAAP. Difference between various types of investments: subsidiaries, joint arrangements, and associates. Learn how they are accounted for under IFRS and US GAAP.